From Procurement to the Commissioning of Public Services

Today, the challenges facing governments are increasingly shifting away from traditional, simple problems to those that are more complex and interconnected. At the same time, fiscal constraints and a growing demand from citizens for core services seem to have become a constant in government operations. Although resources are increasingly limited, citizens still have expectations and assume that governments will work together to address them through new and creative approaches. Responding to these issues has led many jurisdictions to focus greater attention on innovation and exploring new ways to design and deliver public services.

Increasingly, governments around the world have adopted approaches that have included leveraging the expertise and resources of the private sector through alternative service delivery approaches. Despite many success stories, many have also found that these new types of arrangements are difficult to manage and have not always led to the intended results such as cost reduction or improved quality of services. More recently, a number of jurisdictions have introduced the concept of “commissioning” which goes well beyond traditional procurement and outsourcing agendas.

According to the Institute of Government (UK), commissioning refers to the process of assessing the needs of people or users in an area, designing and specifying the services to meet those needs, and choosing the delivery mechanism that makes the best use of total available resources. Commissioning focuses on outcomes rather than process or inputs, and features partnerships between government and service providers rather than arms-length relationships.

Commissioning offers a more strategic and dynamic approach with a clear focus on injecting greater diversity and competition into the public service economy. By creating public service markets, the expertise and resources of the private and not-for-profit sectors can be harnessed and leveraged through new business and delivery models. The approach recognizes and separates clients (purchasers) from service providers to enable public bodies to concentrate on what should be delivered (outcomes focus) rather than how such service should be provided. The intent of a more open and competitive public service market is that incentives are created to drive innovation, reduce costs and empower citizens. Competition and choice can be important mechanisms to foster change using limited government intervention. The approach has also enabled the adaptation of traditional tools to ensure that they are more dynamic and responsive to the needs of the new partnership arrangements (e.g., contracts).

In a context of continuing fiscal challenges and low economic growth, it has become imperative for governments to unlock the potential of the public service economy (although it cannot be suggested that all public services would benefit from such an approach). In particular, the case can be made for government to consider an explicit public service economy approach in areas where competition, contestability, and diversity in service delivery can generate value, improve productivity, foster innovation, and enhance accountability to the consumers of public services and to taxpayers. Employing a public service economy approach means that government administrations must be willing and prepared to employ new types of approaches with new forms of partnership and where traditional support systems are modified (such as procurement, oversight, and risk).

It is important to recognize that commissioning is separate and different from more traditional approaches that include procurement, outsourcing and austerity measures. It may be more effective to think about commissioning not as an on/off switch but as an evolving policy approach that separately recognizes purchaser and provider in the service delivery mechanism. We should also appreciate that modern commissioning approaches have evolved from earlier alternative service delivery approaches. In this evolution, we can imagine a progressive (and complex) process of differentiation between classic procurement and strategic commissioning, which represents a much broader, dynamic and involved approach that favours outcomes over outputs and is often considered to be closer to an art than to a mechanical approach to tendering and outsourcing.

It is an approach that does not presume any particular delivery model. However, it takes us beyond the old dichotomy of private versus public delivery and recognizes that numerous models in between, such as social impact bonds, public-private joint ventures, run-build-run-repatriate, personal budgets, as well as in- and outsourcing. A key challenge is for governments to focus on the evidence, agnostic to delivery models and ideological notions on who should do what. Similarly, it is important to distinguish commissioning from procurement. Procurement is arms-length and is execution against a pre-determined model. Commissioning, on the other hand, is relational at the outset and based on co-design with both potential providers and users.

Arguably one of the jurisdictions where commissioning is most developed is the United Kingdom, particularly in the application of commissioning to health care services. In 2014, the Health Services Management Centre and Institute of Local Government Studies in Birmingham released a report on commissioning that isolated the standards of high-quality commissioning.

The table above highlights the main area(s) in which commissioning is different from classic processes of outsourcing and procurement.

Commissioning is both an alternative – we believe a better alternative in many cases – to classic outsourcing and procurement processes, and a tool for innovative public service delivery that can provide important benefits to all those who are engaged in it. However, commissioning is not a stand-alone policy but the result of an evolution in service delivery approaches. As such, it is dynamic and interconnected to both internal and external dynamics. This means that it will require careful attention both in the ‘set up’ phase and during the service delivery phase where careful measurement, the considerate application of incentives, and maintaining effective accountability chains.

Experience has shown that commissioning holds significant promise for governments across the globe to be better positioned to take advantage of a public service economy whereby other actors (private and non-profit) can play a more substantial role in the delivery of (at least some) public services. If exercised correctly, this shift has been proven to drive higher quality services, greater client satisfaction, enhanced innovation and ultimately, lower costs. As a global thought leader who helped establish commissioning regimes in the UK and Australia, Gary Sturgess notes that, “by introducing greater competition and diversity into the design and delivery of public services, commissioning has created more latitude for partnerships with the private and not-for-profit sectors and has also helped to spur economic growth while enhancing government’s capacity to meet the evolving demands of citizens”.

The Institute of Public Administration of Canada (IPAC) in collaboration with KPMG (on a pro bono basis) offers a training academy and workshops to share commissioning approaches with senior executives in governments across the country. These sessions provide an introduction to the concept and approach of commissioning, showcase case studies from around the globe and across Canada, and provide an opportunity for deep dialogue about the participants’ own transformation efforts.

Dr. Robert P. Taylor is a CEO at Institute of Public Administration of Canada.

Dr. Andrea Migone is a Director of Research & Outreach at Institute of Public Administration of Canada.